Philip Morris - SWOT, Porters Five Forces Analysis, Strategy, and Organizational Structure - Case Study Example

Philip Morris case study Introduction Philip Morris International (PM) is a worldwide US based leading tobacco company. The business was incorporated in the year 1987 and the company engages in market in US and outside of US through its subsidiaries, affiliates as well as their license. The company was a wholly owned subsidiary of the Altria Group till the parent company distributed all of its shareholding in the year 2008. SWOT analysis Strengths: The company depicts a strong financial situation. As per the company’s annual report, there is as growth in reported net profit. The company has a well established product branding with famous brands like Marlboro, L&M etc. due to established product branding, the company save lost of money on advertisement (Albright, 2016). The cp,[any depict a strong labor force, with more than 76000 workers across the world from diverse culture and ethnicity, with an assortment in the labor force, there is an assortment of concept that might be important for the existence of the business in the worldwide business situation. The company depicts a strong team with strong and effective management team; the company also has a leading market as a result of the boast of the eleven markets out of 30 worldwide markets. This is same to 30% possession of the entire worldwide market which is one of the strength of the company. Weaknesses The litigation seems to be the just weakness that affects Morris Philips. Government policies on the marketing and sell of the tobacco linked product stop the business from aggressive promotion and marketing its product. Opportunity The growth in tobacco depicts an opportunity for the business. Even thought anti tobacco is growing their voice against the production and supply of the tobacco, the tobacco market is still profitable. It grows million of pounds as income to the government and to the producers. The benefit of globalization provided the company with an opportunity of taking an advantage of the cheap labor force provided by the developing nation. The mergers and collaboration is neither opportunity for the business since, the company entered into a merge with Altria nor it in recent times announced its associations for future tobacco company (Black, 2011). These kinds of mergers provide the business with an opportunity of expanding its market shares. The threat Anti tobacco activist is a big threat. The company has remain a most controversial company since anti tobacco activist have allows criticized the tobacco company for being accountable for the death as a result of smoking. The activist for instance in Philippines complied that the merger between the Philip Morris and fortune Tobacco Company depict fear of drawing more smokers in Philippines (Crane, 2016). The government legislation such as banning of the sales of tobacco linked product to person below the age limit ban on public might minimize the sales of tobacco. The public awareness makes people to very aware concerning the impact of tobacco usage as a result of advertisement of anti tobacco activist. This leads to reduction the tobacco sales. Industry and do a Competitor Analysis and the Profitability PORTER’S FIVE FORCES ANALYSIS The Threat of New Entrants In spite of the substantial profitability live within the tobacco industry that might attract new companies into the market, the threat of new entrant is minimal as a result of high entry barriers, operating at a local market doesn’t mean such high expense or high economies of scales, makes the growing companies to enter into the market, nevertheless, considering the fact that the soon or later the companies will need to grow to a worldwide level, the barriers to entry is very high. It require a high economics of scale to compete with the leading tobacco companies accords the word which is very hard to catch up with them and its financially demanding as well (Debelak, 2000). Bargaining Power of Suppliers The tobacco companies normally need the raw material from external suppliers. Nevertheless, the main constituent in the tobacco production is the tobacco leafs. As per the tobacco at least third editions, the tobacco being grown in more than 121 nations on almost 45 million hectares of the agricultural land which consumes moiré of arable land as all the orange grove or banana plantation (Jakki J. Mohr, 2009). The supply of leaf is as well secured by some contract that the business enters with the leaf suppliers which guarantees the stability of at least 0% of the worldwide leaf requirement and enables the business to improve leaf supply and demand. As a result of high number of tobacco leaf suppliers in the worldwide market and the purchasing power of consumers, the conclusion is that the bargaining power of suppliers is low. Bargaining Power of Buyers Addicted clients depict a tendency of not caring about the afterward effect, product standard or the prices. They attach individual values to the tobacco usage which leads to improved customer loyalty. Nevertheless, in times of economic downtown, clients depict the tendency of switching to the cheapest brand which adds some pressure for the costly brand to low price (Jakki J. Mohr, 2009). The growth in health insights by clients and afterward the policy by some nations is a matter that the tobacco firms must deal with. This adds pressure on firms to create a product with the significance of reducing the risk of tobacco linked diseases and makes the company to switch the focus from developed to developing countries in which there is less government policy and high birth rate. The wider perspective I deem that buyers practice a medium low poor over the tobacco firms. The Threat of Substitute Products In response to the consumer growth in health insights, the largest substitutes for the tobacco consumers might be quitting the smoke resorting to using other tobacco products like the nicotine patch or inhalers. Nevertheless, even though the notion of quitting smoking might seems to be appealing under the hope of healthy life and savings, the product didn’t gain much fame and consumption amongst the tobacco consumers, lacks substitute for cigarettes. Internal Rivalry The tobacco market is the biggest concentrated market worldwide with 75% of the global tobacco market being controlled by four corporations. The market might be explained as a product differentiated oligopoly where few worldwide players dominate the market, supply of same product but with dissimilar traits enables the companies to gain market portion over their competitors (Luther, 2011). . In recent times, there is pour of high commons in the tobacco market with regards to branding, package, standard and flavor. However, in what I concerns to be a reduction of the product, the firms have been in a position of pricing the cigarettes above the competition margin for the extended period. This is depicted in the improved profits margin that firms in the tobacco industry have and realized some conclusion although no explicit proof exist (Jerry, 2009). Furthermore, considering the fact that autonomous depicted amongst the firms in the market, tobacco firms wide assortment of products that for each customer preference as well as the financial potency of those firms. The completion in the market papers to be random strategy in the short term, since the change in price might be fast by their competitors. The rivalry in tobacco market is deeming to be medium. Critique the company’s strategy The Marlboro brand is an important strategy for Philip Morris and the company has been focusing on boosting the existence of the brand through its Marlboro 2 initiates. The move must take shape in 100 diverse markets. The company centers on boosting interest and upholding the pricing power, Philip Morris anticipates Marlboro to be significant in its entire success strategy. In spite significance of Marlboro, Philips Morris stills depends on the other brand to provide a more complete portfolio of cigarettes to its global market. Some cases, the brand fame conceal that of Marlboro to an extend that the business might charge a high price for other brands, by mixing the premium, discounts and mid range cognates, Philip Morris might delivers what consumers need in every market across the globe (Luther, 2011). Reduction in risk product gains fame in the tobacco market, but Philips Morris is not just following other competitors into electronic cigarettes that don’t provide a tobacco based experience. It is as well excited concerning its IQOS heat not burn products, and test in some market have provided some promising outcomes. Since IQOS and its heat stick turns to be improved, Philip Morris must be in a position of making its promotion for the product even more appealing, which might drive further expansion. This strategy is linked to analysis 1 and 2 above. Company’s leadership Philip Morris international management team depicts a comprehensive expertise that provides collective in-depth and business knowledge to triumphantly manage the business and the word class portfolio of brands. The company believes that the main duty of the leadership in the company is to foster the strategic success of the company, consistent with the regulatory accountability to the stakeholders. The management team has the duty of determine the corporate polices, setting the strategic directions as well as oversee the management, which is accountable for the daily business operation at Philip Morris (Wilson, 2012). Many materials are supplied to the amendment team on a continuing basis throughout the year and report and presentation are made at the board and committee conference to ensure that the board is well informed on the continuing basis of the performance of the company, their future plans, the many maters that the company faces as well as the new developments. In this regards, the leadership style at Philip Morris is important in ensuring that the company strategic objectives is met on time since, the company is having a qualified , skillful and experienced managers And leadership who will provide the best leadership for the company in meeting its objectives. The company’s organizational structure The company’s employees are the greatest strength and the key to the business successes. The companies diverse worldwide labor force of more than 81000 workers speaks more than 90 languages and comes for every corner of the world/ the company aims at attracting, motivating as well as retaining the best worldwide talents and supporting the workers through individual development and career management plans that appreciate potential and give regards to their attainments (McDonald, 2002). The organization structure for Philip Morris is important tin meeting its strategic objective since; the leadership is dedicated to operating with competency, integrity and is centered on accountability delivering the strategic sustainable objectives. The management applies the high standards everywhere the company operates and have sets clear as well as quantifiable target that aids in reducing the ecological effects that is being experienced across the globe. The leadership style and the organization structure for Philip Morris furthermore, support the communities that its workers live and work and the source of its tobacco, its contributions plans makes a difference in life of many people around the worldwide. This is some of the very best leadership style and the best organization structure that aids Philip Morris in meeting its objectives. Opinion about the company’s potential future (10 – 15 years) The company’s continued expansion will place reliance on the venture in new capacities, branding, supply channels, technology as well as existence in emerging and mature markets across the globe. Expansion in emerging markets The growth in population as well as the growing disposable income in emerging market is the top down expansion catalysts for the tobacco industry and hence Philip Morris has been taking advantage on the expansion potential of tobacco options products through aggressive and innovative product initiative. It is evident that the business is developing a strong portfolio of reduced risk products to offsets the effect of mass reduction of customer cigarettes (Roman Hiebing, 2011). High margin mature economies Philip Morris is exist in every market across the globe, which acts as the main expansion catalyst for the business. The company has exposure in merging economy that provide huge expansion potential and in developed economy that already depict high margins. In the meantime, tobacco firms have been purchasing the smaller electronic cigarettes firms in an effort of taping into the expanding electronic vapor as well as cigarettes options market. Philip Morris acquisition of Nicocigs not just lead to growth in the market but in electronic e-cigarettes but also opened doors for the growth in the market like United kingdom. This are some of the best indicating that Philip Morris will grow in the next 10 to 15 years and hence, the business is anticipated to survive the current mass reduction traditional cigarettes customers as well as strict policies on smoke and its effect on health (Carroll, 2014). The future business growth forecast for the Philip Morris is attributed to improved brand behavior as well as culture through brad innovation as well as extension plans. These plans must support tailor brad to adhere to the consumer preference, growing sales through brand perception. The company new move of having a reduced risk product is anticipated to improve the revenue for the next 10 to 15 financial periods. The company will anticipates an annual production capability of the reduced risk product initiatives to reach 30 billion un its which is focused to aid the company’s market compete Reynolds Amerce electronic cigarettes. In Asia, the net usage tends to grow with the growth in population, economic progression as well retail developments. as a result of tariffs as well as other constraints, Philip Morris plans to develop small production units n Asia, a plan that just support optimize manufacturing base whilst taking into account the development of trade blocks (Ronald Paul Hill, 2014). The collaboration between Philip Morris and Atria group is a sign of business growth in the future. The combination of power to revamping the supply of their electronic vapor product is anticipated to improve the company’s revenue and market dominance for the next 10 to 15 years. The mutual collaboration between the Philip Morris, Altria groups and the food and drug administration policy engagement linked to heated tobacco product and with the international policy related to Vapor product is a big boost to future business performance for the Philip Morris and hence, it is anticipated that the business growth and market dominance by Philip Morris will grow for the next 10 to 15 years (Wilson, 2012). Following the spree f acquisition from peer firms, Altria group and Philip Morris have grown their vapor development dealing to entail joint research, developments as well as technology sharing polices for eccentric cigarettes. This expanded contract entails exclusive technology cross license, technical information share, scientific appraisal, collaboration, policy engagement as well as approval to this product. This is best contracts and business deals that will see Philip Morris grows in the future in terms of business performance, profitability and market share across the globe. Bibliography Albright, C. (2016) Business Analytics: Data Analysis & Decision Making - Page 230, London : Cignage Learning. Black, K. (2011) Business Statistics: For Contemporary Decision Making - Page 296, London. Carroll, A. (2014) Business and Society: Ethics, Sustainability, and Stakeholder, New York: Cingage Learning. Classe, J. (2015) Business Aspects of Optometry: Association of Practice Management, London: John Wiley. Crane, A. (2016) Business Ethics: Managing Corporate Citizenship and Sustainability , New York: Cingage learning. Debelak, D. (2000) Streetwise Marketing Plan: Winning Strategies for Every Small Business, New York. Guler Aras, ‎.C. (2012) Business Strategy and Sustainability, New York: John Wiley & Son's. Jakki J. Mohr, ‎.S.‎.F.S. (2009) Marketing of High-technology Products and Innovations. 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